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Cash Forecasting Trends in Asia


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Cash Forecasting Trends in Asia

  1. 1. Cash Forecasting Trends in Asia 2013 (SURVEY RESULTS)
  2. 2. The BIG Question: Where’s the Cash? Optimising cash flow forecasting offers tremendous potential for companies to improve their financial performance. By employing industry best practices, corporations can have a better view of their cash position, which enable them to manage liquidity risk more effectively. In the aftermath of the recent financial crisis, corporations have learned the importance of effective cash and liquidity management. As banks and lending institutions become more restrictive in their lending policies, companies had to turn to their own internal resources to smooth any gaps in their cash flow curve or invest in business expansion. In order to optimise the use of their own resources, reliable data representing actual and expected cash position must be available. Without efficient cash flow forecasting, it would be very difficult to track, analyse and manage risks. While 100% accuracy may not be possible to achieve, aiming for the highest level of precision in forecasting cash positions should be a top priority for corporate treasurers and CEOs. The latest and most comprehensive treasury management survey revealed just that.
  3. 3. Survey Says: Cash Flow Forecasting, Primary Challenge Across Asia Pacific Bank of America Merrill Lynch and SunGard recently released the Asia Pacific Treasury Management Barometer Survey 2013 wherein five key priorities for treasurers in Asia Pacific over the next 12-24 months were identified. These are: 1. 2. 3. 4. 5. Improving cash visibility Yield enhancement and interest expenses Concentrating cash Rationalising bank accounts Mitigating counterparty risk “Asia is not alone in highlighting visibility and connectivity as a key challenge and focus for the next 12 – 24 months,” notes Steve Evans, COO, Treasury, Payments and Messaging, SunGard. “But while attitudes towards technology in treasury remain conservative across the region, it is interesting to note that when asked: ‘What are the greatest barriers to accuracy in forecasting?’, the vast majority identified, not technology limitations or their banking partners, but their own internal processes and policies. The key message here is that technology can be both an effective tool and a long term enabler, but the quickest wins will come from reviewing and restricting your own policies and procedures.” Cash flow forecasting, a modeling method used by companies to gauge future cash positions, was identified as a ‘pain point’ by treasurers operating in the Asia Pacific region. The survey revealed that only 14% indicated complete satisfaction with their existing cash flow forecasting processes, while the majority (70%) remain only moderately to somewhat satisfied, a clear indication that across the industry, there is substantial room for improvement. Among the key challenges cited were inaccurate data, lack of integration, cumbersome reporting processes and inefficient staff.
  4. 4. Following are the results of the survey of over 900 treasurers who shared their views and pinpointed their primary focus for the next 12-24 months. Conducted by Bank of America Merrill Lynch and SunGard, these results were part of the Asia Pacific Treasury Management Barometer 2013 report released recently.
  5. 5. Do you use cash flow forecasting tool? 67% of respondents do not currently use any form of forecasting tool for cash.
  6. 6. What system does your treasury use for cash flow forecasting and overall treasury management? Of the respondents who use cash flow forecasting programs, a huge bulk (69%) rely on spreadsheets.
  7. 7. What are the key challenges to accurately forecast your cash flow? There are several key challenges to accurately forecast cash flow. Inaccurate sales target projections and lack of systems integration were among the top concerns.
  8. 8. What are the primary areas of focus for your treasury in the next 12 months? The priority is visibility. One quarter (25%) of total respondents pinpointed improving cash visibility as their main treasury priority.
  9. 9. How would you describe your level of cash visibility? Over 73% of treasurers polled believe that their level of cash visibility is sub-optimal.
  10. 10. Correlation between technology usage and cash flow management Company Revenue >$10 billion $5-10 billion $1-5 billion $500 million - $1 billion $100 - 500 million Spreadsheets Specialist treasury workstations 60% 28% 48% 22% 69% 17% 77% 11% 78% 9% Hosted/cloud-based treasury management systems Treasury module from ERP vendor In-house applications 11% 26% 12% 11% 1% 32% 23% 56% 19% 33% 29% 25% 23% 9% 21% End-to-end treasury & liquidity solution provided by banking partner 9% 4% 2% 2% 1% Treasury applications provided by banking partner via eBanking portal Other 9% 7% 0% 5% 2% 4% 4% 0% 5% 5% According to the 2013 Asia Pacific Treasury Barometer, a significant portion of those that do use cash flow forecasting tools, utilize spreadsheets. With spreadsheets, there is no connectivity to other systems. Frequently, results are often received in other spreadsheets. The information must then either be consolidated or even manually re-keyed. This process clearly opens up the possibility of operational risk. Furthermore, spreadsheets used for processes like cash flow analysis often have multiple macros that come with certain operational risks. To address these issues, several banks have started offering offline cash visibility and global cash position tools based on excel spreadsheets.
  11. 11. How satisfied are you with your cash forecasting processes? *With cash flow forecasting tool 20% of treasurers who are already using cash flow forecasting tools are very satisfied with their cash flow forecasting process…
  12. 12. How satisfied are you with your cash forecasting processes? *Without cash flow forecasting tool …while of those treasurers who are not using cash flow forecasting tools, only 10% are very satisfied with their cash flow forecasting process.
  13. 13. Want to learn more?
  14. 14. Learn how to optimise cash flow through effective cash forecasting and improved visibility in developed, emerging and cash trapped countries at 19-20 November 2013 | Singapore To attend the conference, email or call +65 6722 9388